Sorry if I mis-interpreted your positions as Austrian. They seemed to extoll a situation with classic market failures as able to succeed without government intervention. Yeah, if you believe that government intervention is needed for market failures then that would be neo-classicism. But, private info in insurance markets is one of the classic market failures, so a neoclassicist to me, would endorse government intervention here. But, I agree this is not justification of government intervention by any means. It's not the point of the post. The point of the post is, if the government is intervened as it is, how can it reduce costs.
The argument in rational ignorance is the following. You claimed that poor US policies could be understood if economists abandoned a notion that voters are self-interested outside of voting, but altruistic when voting. Yes, this is possible, but I'm not sure if I agree that economists adopt that model. Altogether differently, I prefer to understand poor US policies as the result of rational ignorance, or non-representative political system. Yes, satisfying these two policies are not sufficient conditions for good policies. But, not satisfying them is an intuitive way for me to understand poor policies.
My arguments are not arguments for government intervention. They are arguments for, if the government will intervene to provide government insurance such as Medicaid and Medicare, how can it do so for the lowest cost.
True, there aren't formal models of costs and benefits of specification of use of government transfers. Yes, at first glance it appears that is improving to eliminate constraints, but just because there aren't models of the benefits of these constraints, doesn't mean that in reality there aren't benefits of these constraints. For example, it could be modeled that the search and process costs of converting baby food stamps is a deterrent to converting food to money with which alcohol or drugs might be bought.
Again, these models are not complete by any means. Academic models are a work in progress, and in desperate need of improvement, that 's the point of grad school econ. The point of this blog is not to simply apply leading models to policies, (that is policy analysis), it is also to include pieces of reality that are not modeled. This is true for unconstrained redistributive transfer models, and for public choice models.